Summary
The applicant, a 43-year-old defense contractor and Navy veteran, faced security concerns under Guideline F (Financial Considerations) due to a history of financial difficulties stemming from child support obligations and unemployment. The applicant demonstrated significant progress in managing his finances, including paying off several debts and improving his credit score, leading to the granting of his security clearance.
Under Guideline F (Financial Considerations), the Statement of Reasons alleged the following: credit card, $3,856 – UNRESOLVED. Applicant used this account for home remodeling expenses in 2006. In 2007, he was paying substantial child support and near the end of the year he became unemployed. He could not afford to pay the balance and meet his monthly expenses In June 2009, the creditor was awarded a judgment against Applicant. He contacted the creditor in 2009 to negotiate a settlement, but they could not reach an agreement, and he could not afford to make the full payment. He again contacted the creditor in July 2011 to negotiate, but the creditor would not agree to a settlement. This is a duplicate of the debt listed at allegation 1.f (1.a). credit card, $5,389 – PAID. Applicant negotiated a settlement that combined the debts in allegation 1.b and allegation 1.c., which are both owed to the same company. He used accumulated savings from his deployments during 2010 to make a one-time payment of $4,269 in July 2011. He provided documentation from the creditor showing that both debts are paid (1.b). personal loan, $3,102 – PAID. See allegation 1.b (1.c). mortgage, $28,104 – UNRESOLVED. This debt was 120 days past due when the SOR was issued. Applicant had problems meeting the payments since about 2008. Between about 2006 and 2008, he made attempts to sell the property, but had no offers. He has not attempted a short-sale. In about 2004 or 2005, Applicant requested a modification and was informed he did not qualify. He contacted the creditor in July 2011, formally requesting a modification. While Applicant was deployed during the December holidays, the lender forwarded a form letter offering to discuss options. As of the hearing date in early January, he had not been in touch with the lender. Applicant has paid the property taxes and filed building permits, as required, during his ownership (1.d). mortgage, $9,903 – DISPUTES. The August 2011 credit report shows that this account is $2,403 in arrears. The debt is part of the mortgage loan listed at subparagraph 1.d. Applicant believes that in about 2008, this creditor passed funds to the lender to bring Applicant's account current. He is unsure about how the process worked: It was very, very sketchy. I couldn't explain how it worked if my life depended on it, I'm not sure. All I know is that [lender] says that I owe them, the last time I spoke with [lender], that I owe them the remaining balance on the mortgage. In July 2011, he contacted the creditor, who would not agree to anything less than full payment of the arrearage. Applicant believes he owes the entire mortgage balance to the lender, rather than this creditor. He provided documentation showing that he has disputed this debt with the credit reporting agencies. His credit report shows the account is “closed due to transfer or refinance.” (1.e). credit card, $3,962 – DUPLICATE. This debt, owed to the same creditor as the debt at 1.a, is a duplicate of that debt (1.f).
The judge granted the clearance. The government raised disqualifying conditions AG ¶ 19(a), AG ¶ 19(c). The judge applied mitigating conditions AG ¶ 20(c), AG ¶ 20(d), AG ¶ 20(e). The decision turned on the following: The applicant demonstrated a good-faith effort to resolve his financial issues, including paying off debts and improving his credit score; He maintained current payments on his monthly expenses and adhered to a strict budget; The applicant's financial situation improved significantly after his child support obligations ended and his income increased.
Why the Applicant Prevailed
- The applicant demonstrated a good-faith effort to resolve his financial issues, including paying off debts and improving his credit score.
- He maintained current payments on his monthly expenses and adhered to a strict budget.
- The applicant's financial situation improved significantly after his child support obligations ended and his income increased.
Conditions Referenced
- AG ¶ 19(a)raisedInability or Unwillingness to Satisfy Debts
- AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations
- AG ¶ 20(c)appliedThe Person Has Received or Is Receiving Counseling for the Problem And/or There Are Clear Indications That the Problem Is Being Resolved or Is Under Control
- AG ¶ 20(d)appliedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts
- AG ¶ 20(e)appliedThe Individual Has a Reasonable Basis to Dispute the Legitimacy of the Past-due Debt Which Is the Cause of the Problem and Provides Documented Proof to Substantiate the Basis of the Dispute or Provides Evidence of Actions to Resolve the Issue
Key Rule Quoted
“An applicant is not required, as a matter of law, to establish that he has paid off each and every debt listed in the SOR. He must only show that he has a plan to resolve his debts and taken significant actions to implement it.”
Procedural Posture
- SOR issuedOct 21, 2011
- Answer filedNov 8, 2011
- Hearing heldJan 11, 2012
- Decision dateJan 31, 2012
Cite For
- Mitigation of Financial Issues Under Guideline F
- Good-faith Efforts to Resolve Debts
- Whole-person Analysis in Security Clearance Decisions